Does it matter when you gift the money?

Yes, gifts given more than seven years before you die are exempt from Inheritance Tax.

Any gift given between three and seven years before your death will be liable for Inheritance Tax at a reduced rate. This is known as taper relief.

If you die less than seven years after you have gifted money, the gift will be subject to Inheritance Tax. But the amount of tax payable will depend on the value of the gift:

1.

If the gift is above the Inheritance Tax threshold: The recipient, or a representative of your estate, has to pay Inheritance Tax on the total value of the gift. E.g. gifts over £325,000.

2.

If the gift is below the Inheritance Tax threshold: The value of the gift is added to your estate, and tax is paid on the amount over the threshold. E.g. if your estate is worth £300,000 and you gifted £50,000, your estate only pays tax on £25,000.

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